FEDERAL COURT OF AUSTRALIA

Save the Ridge Inc v Commonwealth of Australia [2004] FCA 1167

SAVE THE RIDGE INC v COMMONWEALTH OF AUSTRALIA & AUSTRALIAN CAPITAL TERRITORY

ACD16 of 2004

WHITLAM J

8 SEPTEMBER 2004

CANBERRA

THE COURT ORDERS THAT:

1.                  The applicant is to give by 12 noon on 20 September 2004 security in a form acceptable to the District Registrar for the payment of the first respondent’s costs in an amount of $25,000 and for the payment of the second respondent’s costs in an amount of $25,000.

2.                  If security is not given in accordance with order 1, the proceeding be thereafter stayed.

3.                  The applicant is to pay each respondent’s costs of its motion for security for costs.

Note:    Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.

REASONS FOR JUDGMENT

1                     This proceeding was begun on 10 June 2004.  It was commenced irregularly.  The applicant is a corporation.  Yet the application was not filed by a solicitor.  No attempt to serve that application on the respondents was made.  The date for hearing endorsed on the application had twice to be altered to a later date.  Eventually a solicitor was appointed to act for the applicant, and notice of such appointment was filed on 27 July 2004.  At the same time the applicant filed notice of a motion seeking interlocutory relief.  (No such claim was made in the application.)  At the applicant’s request the date fixed for directions was vacated, the time for service of the notice of motion abridged, and the motion was brought on for an urgent hearing before Stone J on 29 July 2004.

2                     The subject matter of the proceeding is the planning, construction and operation of an arterial road in the ACT known as the Gungahlin Drive Extension (‘the GDE’).  The applicant’s motion sought interim injunctions prohibiting the National Capital Authority from granting certain approvals and the second respondent from continuing work in respect of the GDE.  The motion was refused by Stone J on 30 July 2004.  Her Honour made no order as to costs, but she gave leave to appeal from her judgment.  An appeal was heard that same day.  The Full Court (Wilcox, Moore and Gyles JJ) dismissed the appeal and ordered that the costs of the appeal be the respondents’ costs in the cause.

3                     On 5 August 2004 the first respondent was named as a party to the proceeding and the applicant was given leave to file an amended application.  Pursuant to directions subsequently given by Gyles J, each of the respondents filed on 18 August 2004 points of defence.  The amended application is a curious document.  It is not substantially in accordance with either Forms 5 or 56 prescribed by the Federal Court Rules (‘the Rules’).  The application invokes the Environment Protection and Biodiversity Conservation Act 1999 (Cth) (‘the Act’) as the basis of the Court’s jurisdiction, but the applicant also seeks relief under the Administrative Decisions (Judicial Review) Act 1977 (Cth) and s 39B of the Judiciary Act 1903 (Cth).  In any event, a section of this strangely hybrid document headed ‘Grounds of application’ contains nine numbered paragraphs and somewhat resembles a pleading.  The points of defence join issue with several of the allegations in this section of the application.  In particular, they raise questions as to whether any of the activities identified in paragraphs 3 and 7 of that section constitute an ‘action’ for the purposes of the Act.  On 19 August 2004 Gyles J ordered that those questions be decided under O 29 of the Rules and fixed such hearing for 27 September 2004.

4                     In the meantime, on 2 August 2004 the second respondent’s solicitor wrote to the applicant’s solicitors about the ability of their client to meet any costs awarded against it in the proceeding and requested details of the applicant’s financial resources.  The first respondent’s solicitor also wrote to the applicant’s solicitors on 3 August 2004 about the capacity of the applicant to meet any costs order.  The applicant’s solicitors replied on 4 August 2004 to the second respondent’s solicitor that they were ‘seeking instructions from our client and will advise you further shortly’, but they enclosed a statement dated 1 August 2004 of the applicant’s income and expenditure for the financial years 2002, 2003 and 2004.  Copies of that letter and the enclosure were also sent to the first respondent’s solicitor.

5                     The first respondent’s solicitor sent an email message to the applicant’s solicitors on 17 August 2004, indicating that they were awaiting a substantive reply to their letter of 3 August 2004.  After the separate questions were fixed for hearing on 19 August 2004, the solicitor wrote again, reserving the right to seek security for the first respondent’s costs which were estimated to be ‘in the order of $35,000’.  On 23 August the second respondent’s solicitor also pressed for a suitable assurance from the applicant and reserved the right to seek security for the second respondent’s costs which were estimated at ‘approximately $42,000’.  On 25 August 2004 the applicant’s solicitors replied to the respondents’ solicitors conveying instructions that their client believed the costs estimates to be excessive and that any application for security for costs would be strenuously resisted.  The foreshadowed applications for security for costs were then promptly made, resulting in the motions presently before me being brought on for hearing at the earliest convenient date.

6                     The motions were heard together.  The affidavits in support were made by Paul Vermeesch for the first respondent and by Kuan Yian Sim for the second respondent.  Mr Vermeesch and Mr Sim are the solicitors with the carriage of the matter in the offices of the respondents’ solicitors.  Each of these affidavits was read without objection.  Both Mr Vermeesch and Mr Sim were cross-examined.

7                     Mr Vermeesch explained in some detail how he estimated that solicitor/client costs to be paid by the first respondent could amount to $57,000 in respect of work done to date and the hearing of the separate questions.  Mr Sim said that as at 27 August 2004 the solicitor for the second respondent had undertaken work in the proceeding ‘to the value of $12,540’ and had paid fees to counsel totalling $14,725.  He estimated $14,000 for further fees to be paid to counsel on the hearing of the separate questions.  In cross-examination, it was put to both solicitors that they had greatly overestimated the amount of costs likely to be allowed on party and party taxation, that costs charged on a time basis were unlikely to be allowed on taxation, that fees paid to counsel for preparation were not allowed on taxation, and that the retainer of senior counsel was not justified.  Neither witness agreed with these propositions, and each of them carefully explained how he had arrived at his estimate of the amount required for security for costs.

8                     The applicant adduced no evidence.  I am satisfied that the estimates of Mr Vermeesch and Mr Sim are realistic.  In particular, I am firmly of the view that it was reasonable and prudent for both respondents to brief senior counsel in this case.  I also reject any contention that costs must necessarily be estimated in the form of a bill of costs suitable for taxation.

9                     The authorities on the exercise of the discretion under s 56 of the Federal Court of Australia Act 1976 (Cth) have been usefully collected and explained by Hely J in Truth About Motorways Pty Ltd v Macquarie Infrastructure Investment Management Ltd (2000) 34 ASCR 673 at 678-681.  Senior counsel for the first respondent has very properly reminded me of what his Honour said (at 679-680 [35]) about the importance of the particular legislative scheme.  In this context, he has directed my attention to Divs 14 and 16 in Pt 17 of the Act.  He has also pointed out that the applicant is an ‘interested person’ for the purposes of an application for an injunction under s 475 of the Act.

10                  Counsel for the applicant submitted that it had not been established that his client possessed insufficient means to meet any costs awarded against it.  I do not accept that submission.  The quantum of likely costs has been fairly and realistically estimated by the respondents.  The cash available to the applicant as at 30 June 2004 was a modest sum of $7,566.28.  I infer from the funds statement for that year that in the normal course this sum is not likely to have been augmented greatly by donations over the past two months. The information furnished by the applicant may safely be relied on to demonstrate its impecuniosity.

11                  The applicant is accorded standing under the Act.  However that may be, if the questions to be decided under O 29 of the Rules are answered adversely to it, the proceeding is likely to be dismissed with costs.  The respondents should have the ability to recoup such costs.  Unless an order for security for costs is made, I cannot be confident any part of such costs will be paid.

12                  I am conscious that it is only a short time until the dates fixed for hearing of those questions.  It was not suggested to either of the witnesses that the respondents were obliged to pay counsel for those hearing dates, even if the proceeding were stayed.  Nor is there any evidence that the making of an order for security will have the effect of bringing this proceeding to an end.  Indeed, counsel for the applicant did not go beyond submitting that any delay in arranging security may imperil the hearing dates.  (This was advanced as an argument against such an order being made.)

13                  Each respondent should be provided with security in the sum of $25,000.  This is the minimum sum that I consider the applicant should have promptly offered in early August by way of security to each respondent in view of its apparent impecuniosity. 

14                  The applicant must pay each respondent’s costs of its motion.

Associate:

Dated:              8 September 2004